Farmers in the Philippines plant and harvest rice twice a year. The dry-season crop is harvested starting March, while the wet-season crop is harvested starting late September. In some areas, farmers plant only once a year because of bad weather. This has been the practice of farmers for many years as they always follow the traditional rice-cropping calendar.
The government is aware of this, that’s why the schedule of rice imports is being “calibrated.” The calibration depends on the cropping calendar, which makes a lot of sense because the entry of imports during harvest time could spell disaster for farmers. Flooding the market with cheap imports during harvest would give traders an excuse to buy palay from farmers at bargain prices. And imports have always been cheap because exporters from Southeast Asian countries have found a way to produce rice at a lower cost on a consistent basis.
Before deciding on imports, concerned government agencies usually look at the inventory of commercial warehouses and the National Food Authority, and data from the Philippine Statistics Authority. In the case of the NFA’s inventory, the NFA Council directs the palay procurement program of the food agency. Unfortunately, the NFA has consistently missed its procurement target. The food agency’s failure to beef up its stocks via purchases of local palay is one of the reasons the Philippines will not stop importing rice. The NFA is supposed to have its own stockpile in keeping with its mandate of stabilizing rice supply and prices, especially during times of calamities.
But import timing is key to ensure that farmers will not be harmed by imports and traders will not have an incentive to hoard stocks. This is why imports usually arrive before the harvest season. In the case of the NFA’s buffer stock for the lean season, rice from abroad arrives before June 30 so the agency can preposition stocks. This is to ensure that food will be available when natural disasters strike.
In the past two years, the Philippines has veered away from its usual practice of importing rice. Last year, the government practically waited until the last minute before announcing its intention to buy rice from abroad to beef up its stocks for the lean season. At least, the announcement and the arrival of stocks did not coincide with the harvest season. In contrast, the signal to purchase additional imports amounting to 750,000 metric tons was made while farmers were about to harvest rice. Part of the volume would arrive at the peak of the harvest season.
Based on the government’s pronouncements, “flooding” the market with rice would weed out hoarders who manipulated prices in recent months following the implementation of the TRAIN law. Unfortunately, this could hurt farmers who did not change their planting practice. Also, the recent spikes in the average farm-gate price of palay do not really benefit small farmers, particularly those who rely on loan sharks.
We hope that government’s decision to bombard local markets with cheap rice imports was a product of careful study. A freefall in average farm-gate price would hit small farmers the hardest. If government is trying to be “innovative,” it should not do so at the expense of local producers.